The East Africa Oil & Gas Summit (EAOGS) 13th - 14th November 2012

The East Africa Oil & Gas Summit (EAOGS) is the official event for the East Africa region hosted in Nairobi. The summit will take place at the Intercontinental Nairobi 13th-14th November.

Hon Prof Sospeter Muhongo, Minister of Energy & Minerals, Tanzania; Hon. Stephen Dhieu Dau, Minister for Petroleum &Mining, South Sudan, Hon. Irene Muloni, Minister of Energy & Minerals, Uganda,Abdul Razak Noormahomed, Hon.Vice Minister, Ministry for Mineral Resources Mozambique and Hon. Kiraitu Murungi, Minister for Energy, Kenya have all officially confirmed their attendance and are leading delegations from their respective countries.

The strategic conference led by the Ministries of Energy and experts from the oil and gas industry will unite investors and industry experts to share their knowledge and explore current challenges and investment opportunities in the region.

The confirmed speaker list includes:

Hon. Kiraitu Murungi, Minister of Energy, Kenya

Hon. Prof Sospeter Muhongo, Minister of Energy & Mineral Resources, Tanzania

Hon. Stephen Dhieu Dau, Minister of Petroleum, Energy & Mining, South Sudan

Hon. Irene Muloni, Minister of Energy & Minerals, Uganda

Hon. Vice Minister Abdul Razak Noormahomed, Ministry of Mineral Resources, Mozambique

Dr. Mukhisa Kituyi, Executive Director, Kenya Institute of Governance

Stewart Johnston, Vice President, IHS

Sumayya Atthmani, Managing Director, National Oil Corporation, Kenya

Bill Tedesco, East Africa Exploration Manager, Anadarko Petroleum Corporation

Galib Virani, Director,  Afren East Africa Exploration

Elly Karuhanga, President, Tullow Uganda

Keith Hill, CEO& Director, Africa Oil Corporation

Malcolm Graham-Wood, Senior Advisor,VSA Capital

William Wakeham, CEO, AAIB Insurance Brokers

Rob Andrew, Managing Director, Newport Africa

Simon Tysoe, Partner, Herbert Smith Freehills LLP

Richard Leach, Managing Director, Hybrid Solutions Group

Dr Richard Sezibera, Secretary General, East Africa Community

Mugo Kibati, – Director General, Kenya Vision 2030 Delivery Secretariat

Robert Leroy Kijedi, Regional Director – Eastern Central and Southern Africa, Nationwide Finance Group, Jacksonville, Florida US

OsamIyahen, SVP Oil Gas and Mining, Africa Finance Corporation

Rajesh Shah, Partner, PWC

Anthony Muthusi, Partner, East Region, Transaction Advisory Services, Ernst & Young

Hakim Muwonge, Partner,Kusaasira & Co Advocates

Riyan Qirbi, Strategy Manager Middle East & Africa, AirBP

Patrick Nyoike, Permanent Secretary,Ministry of Energy, Kenya

Hassan Hassan, Managing Director - Operations, Simba Energy

Tom Gray, Supply Chain Manager, Tullow Kenya

Dr Christian Turner, High Commissioner, British High Commission, Nairobi

Mwendia Nyaga, East Africa Region, Adamantine Energy

In addition over 100 top companies have registered attendees for the event.

There are just 2 days left to book at the price of US$1,950 thereafter the last minute ticket price is US$2,150.

To catch the deadline please download the application form at http://www.eaogs.com/go/eaogs or on the main website www.eaogs.com

More delays for Wind Power Project in Kenya

A few months ago I wrote an article “Wind Power in Kenya why all the delays?” http://eafricaenergy.blogspot.com/2012/08/wind-power-in-kenya-why-all-delays.html, the article explored the reasons behind the delayed implementation of the 300MW Lake Turkana Wind Project (LTWP) and other wind projects in Kenya. Reading an article in today’s Business Daily these delays are bound to persist.  

This is after the World Bank Group withdrew its support of guaranteeing the project through a Partial Risk Guarantee that mitigates the project against perceived political and operational risks via its underwriter, the Multilateral Insurance Guarantee Agency (MIGA).

According to the Business Daily article a spokesman for the project a Mr. Peter Warutere said “The World Bank will not offer guarantees for energy payments under the power purchase agreement or to cover termination obligations to project lenders and equity holders,” 

While the World Bank Group communicated that “After extensive discussions between the World Bank Group and the project, the bank reached the conclusion the LTWP project, as currently proposed, is not a good fit for it. We have informed the government and the project sponsors of this decision,”  

The Ministry of Energy, Kenya is not clear on the way forward in terms of supporting the implementation of this key project, now that the World Bank Group has withdrawn their support.

There seems to be a stalemate around the terms of the Power Purchase Agreement (PPA). Safeguards within the agreement  should protect both debt and equity investors that the MIGA agency will pay the investors, if for an unfortunate political or operational reason Kenya Power Ltd(Local utility) is unable to buy the power generated by the project.

This project is being watched closely as it’s a benchmark of how large renewable energy projects may be implemented in Kenya going forward. The Project is also classified as a Vision 2030 flagship project.

It’s unfortunate that challenges keep popping out of the woodwork before this project has taken off. The current challenges relate mainly to the perception of the business climate in Kenya. A lot needs to be done to change this, which should eventually reduce the risk perception and make projects like the LTWP easier to implement. 

Uganda's Bujagali Hydropower Plant Station goes on stream

On the 9^th of October the 250 megawatts (MW) Bujagali Hydropower plant was commissioned by the Ugandan President Yoweri Museveni and His Highness the Aga Khan. This plant doubles Uganda’s power generation to approximately 509 MW.

This hydroelectric power station is located across at the Victoria Nile, and harnesses the energy of the Bujagali Falls in Jinja, Uganda. Construction of the power station began in 2007 and concluded in June 2012.

The project was initially mired in controversy before construction work began when multi-lateral donors withdrew from the project, delaying its implementation for years, citing corruption and other unethical practices. This delay led to Uganda relying on expensive 100MW thermal power plants powered by Aggreko that were needed to bridge the gap of 170 MW power deficit that resulted in regular power black outs and load shedding of up to 12 hours per day. With this station coming on stream this situation should a distant memory for the Ugandan people.

Power demand in Uganda are grown at 10% per annum on the back of an average GDP growth of 6% p.a and a population growth rate of over 3% p.a. over the last 7 years. Power supply has lagged behind leading to the unfortunate consequences listed above.

The project is funding by Ugandan government to the tune of US$ 20million in the form of land. Bujagali Energy Ltd is a US$200m company that owns the project with equity partners who include Industrial Promotions Services (IPS) –A listed Aga Khan Fund for economic development company, Jubilee Insurance (another listed Aga Khan Fund company) and Blackstone Capital/Sithe Global Power consortium. A credit line of US$700m was procured from a consortium of lenders who include The International Finance Corporation (IFC), African Development  Bank (AfDB) , KfW of Germany and Barclays bank. This is an example of where Public Private Partnerships (PPP) can be used to construct much needed infrastructure in Africa where governments are not able to foot the cost of projects on their own.

The commissioning of the plant is also set to save the Ugandan government US$ 9.5million per month in subsidies required to keep electricity tariffs at an affordable rate.

Ugandans should now be able to enjoy uninterrupted power supply throughout the day barring any other issues. It will also save businesses that have had to resort to generators to power their electrical needs at an added cost operational cost.

For more information on this project see website below.

http://www.bujagali-energy.com

Tanzania Mining,Energy/Oil & Gas and Infrastructure Indaba.

The Tanzania Mining, Energy, Oil & Gas and Infrastructure Indaba an independent one stop market place where international investors explore opportunities in Tanzania's mining, energy, oil & gas and infrastructure sectors. 

A three day event where key players in these sectors including government ministers & officials, company executives, relevant organisation heads and other industry player will attend.

To be held in Arusha on

24^th - 26^th October 2012

Arusha International Conference Centre, 
United Republic of Tanzania

To find out more on how to participate as a delegate, sponsor or partner visit their website at:

http://www.tanzaniaindaba.com

KENGEN requests for expression of Interest for a proposed 560MW Geothermal Project Pipeline

Kenya Electricity Generating Company (KenGen) plans to develop upto 560MW of Geothermal Power Plants at the Olkaria field in phases of 140MW each through Public Private Partnerships (PPP).   Interested bidders/consortiums are required to express an interest in either: 

i)                 A Joint Venture Partner with KenGen in the development of the Power Plant: or

ii)                An Energy Conversion Agreement under a tolling arrangement

Under the Energy Conversion Agreement, KenGen will provide steam to the BOOT Contractor under a tolling arrangement and enter into an Energy Conversion Agreement (ECA) with the successful BOOT Contractor. The BOOT contractor will also be responsible for operating and maintaining the plant.  Under the Joint Venture Arrangement, the successful bidder/consortium will develop and own the power plant in a Joint Venture with KenGen. The successful bidder/consortium would be the majority shareholder. The SPV would source for the O&M and the EPC Contractor.

Bidders must clearly specify which of the options above they are interested in.  KenGen now invites qualified and competent BOOT developers  who will design, finance, supply, construct, and operate the power plant for a period of either 10, 15 or 20 years under a BOOT contract after which the ownership will revert back to KenGen at peppercorn 

Bidders must clearly specify which of the two options above and the number of contractual years they are interested in.  

Deadline: Friday the 2^nd  of November, 2012

For more details copy the link below to your web browser

https://dl.dropbox.com/u/82381277/Developers%20for%20560MW%20geothermal%20power%20project%20%281%29.pdf

The East Africa Oil and Gas Summit 13-14 November, Nairobi

East African Ministers confirm attendance at Oil and Gas Summit in Nairobi.

Hon Prof Sospeter Muhongo, Minister of Energy & Minerals, Tanzania; Hon. Stephen Dhieu Dau, Minister for Petroleum, Energy and Mining, South Sudan and Hon. Kiraitu Murungi, Minister for Energy, Kenya have all confirmed their attendance at the EAOG Summit 13-14 November at the Intercontinental Hotel Nairobi. They are leading delegations from their respective countries where they are looking forward to meet the international oil & gas business community and all those interested in investing in the region.

As the Ministers’ initiative for the East Africa region, the EAOG Summit is the most senior annual event in the East Africa oil and gas calendar for 2012. With a planned opening by Prime Minister Raila Odinga, and President Mwai Kibaki and expected attendance by all the Energy Ministers from across Kenya, Tanzania, Mozambique, Uganda, South Sudan, Rwanda & Burundi, the EAOG Summit is the major annual international hub for the oil and gas industry across East Africa.

Check out the clip below.

http://youtu.be/Q6nVbTk9ElY

''The EAOG Summit is the first in what will become a pivotal annual event of great investor and stakeholder interest. We invite both the regional and international oil and gas communities to join us in Nairobi, 12th to 14th November. I ask you to join me in wholeheartedly supporting this event''
Hon. Kiraitu Murungi, Minister for Energy Kenya

Visit the website www.eaogs.com for further details

Territorial disputes in Eastern Africa: The Mineral factor

Territorial boundaries have always been an emotive issue in Africa and have been one of the contributing factors to civil strife on the continent. Most of this strife has been internal owing to the fact that ethnic groups were mixed up during the partitioning of the continent as the imperial powers scramble for Africa in the late 1800s/ early 1900s. The situation was further exacerbated because some communities that were traditional enemies were colonized together due to their proximity and ruled together via a divide and rule philosophy.

These rivalries have continued to play out themselves in Africa’s fluid geopolitical scene over the last 50 years when African countries first obtained independence.  This situation has sometimes lead to civil strife and bitterly contested elections where ethno centric political parties that win have ruled with impunity over their rivals.

Sovereign boundaries currently add a dynamism to the current mineral and energy rush in Eastern Africa as once peaceful neighbours scramble to maximize the mineral wealth deposits under their soil. Since oil and gas reservoirs know no boundaries and interpretations of where borders pass is at the discretion of current leaders, this are bound to raise tensions and could lead to cross border tensions and even conflict in the future.

Recently there have been either border tensions or disputes in all but two countries in the eastern Africa region. These two countries being Ethiopia and Mozambique.

Currently Sudan and South Sudan are embroiled in a dispute over their common border, a region that is rich in oil reserves and was one of the reasons why their civil war dragged on for a very long time. Recently this dispute has led to hostilities that culminated in a shut down in the flow of oil from the region leading to economic hardships in both countries. When South Sudan split from their unhappy union, it went with three quarters of their oil reserves. The border dispute though ethnic and religious in dimension is fueled by the desire of both countries to lay their hands on the oil deposit in the disputed border region especially the Abiyei State. This state and the neighbouring ones that straddle both countries have an ethnic mix of communities that swear allegiance to the rival governments. In the past week the President of both countries have signed an agreement to resume oil production and created a buffer zone between them without comprehensively solving the border issues.

We have also seen an emerging border dispute between Kenya and South Sudan over a barren piece of land in the North West of Kenya/ south east of South Sudan, the Illemi triangle. As The Sudan civil war dragged on for decades before the two countries split up August 2011. The Illemi triangle dispute was tucked away as Kenya worked to mediate an end to the conflict. Now that South Sudan is independent and oil deposits have recently been discovered in the Turkana County (the region of Kenya where the Illemi triangle lies). There are bound to be issues over this region. It has been reported that South Sudan has forwarded the matter to the United Nations for arbitration, even though their government openly denies this. The story of the Ilemi triangle is chronicled in at article The Ilemi Triangle: A Forgotten Conflict by Charles Haskins (http://shalomconflictcenter.org/images/THE_ILEMI_TRIANGLE.pdf)

The Illemi Triangle: Source: Wikipedia

In July of 2012 the Kenyan government completed the allocated all its offshore hydrocarbons exploration blocks available. This prompted the then Somalia Transitional Government (STG) to protest because some of the off shore blocks that were allocated are in disputed territorial waters between Kenya and Somalia. According to the Kenyan Government the convention of boundaries in international water is due east from the point of the on land boundary; this is the agreed convention that governs the offshore boundaries on the eastern Africa coast. However, the STG claims that the border should be perpendicular to the coastline therefore precipitating the dispute. However this dispute can be easily resolved through the UN Convention on the Law of the Sea that is the basis of the international maritime boundary dispute resolutions.

The discovery of oil on the Lake Albert, Uganda, a lake in the Great Rift Valley system that acts a border between Uganda and the DR Congo led to a short term period of skirmishes between the two countries over the issue of the exact location of beacons that demarcate the lake’s boundaries. Both countries henceforth agreed to seat down and come up with an amicable solution to this dispute.

The Lake Albert oil discovery has prompted a rush for exploration in other Great Rift Valley lakes such as Lake Malawi that acts as the boundary between Tanzania and Malawi.  Both countries cannot agree on the exact location of the boundary between both states. The issue is currently a highly contested topic between the governments of both countries.

Lake Albert: Source: http://crossedcrocodiles.wordpress.com

The Lake Victoria, though not a Great Rift Valley lake is the largest lake in the region and the source of the River Nile, has also elicited a dispute between Kenya and Uganda. The dispute is over a barren rock island, the size of a football pitch that acts as a base for fishermen from both countries. Though the island was calibrated to be within the Kenyan border, as per the maps at the independence of both countries. The Ugandan government has laid a claim to it. The waters around the island are known to be rich in fish but the unconfirmed story is that the land under its waters could contain oil or gas deposits.

Though the issues of disputed boundaries and borders is not unique to Eastern Africa, as is the case of the territorial disputes in the South China Sea or The Falkland Islands pitting The UK against Argentina. The disputes in the region are bound to be explosive owing to the recent discovery of hydrocarbons in the vicinity. In most cases there are no clear agreements defining the boundaries nor clear legal frameworks and policies that govern the exploitation of the mineral wealth in cases where mineral deposits straddle boundaries.

The countries in East Africa should come together and draw up a common convention to arbitrate against these potential conflicts that are bound to slow their economic drive on the eve of their hydrocarbon bonanza.